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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Stocks rally as Yellen hints at delaying rate hike The FTSE closed in positive territory on Wednesday as banking stocks recovered and Federal Reserve Chair Janet Yellen signalled a delay to the next increase in interest rates.
Deutsche Bank soothed the market, reversing two days of declines, following reports that it will implement an emergency bond buyback plan.
The bank is expected to focus its emergency buyback plan on some €50bn of senior bonds, according to the Financial Times.
The report came after Deutsche Bank was forced to reassure staff that the bank was "rock solid" and German Finance Minister Wolfgang Schauble said he's not worried about the lender after its shares hit a 30-year low on Tuesday.
"It appears that those reports of Deutsche Bank potentially buying back debt has done far more to reassure investors than the comments from co-CEO John Ryan and German finance minister Wolfgang Schauble yesterday, and has inspired an impressive surge across the banking sector as a whole," said Connor Campbell, senior market analyst at Spreadex.
Meanwhile, Yellen flagged risks to the economy that could delay another increase in interest rates.
In prepared remarks for her semiannual testimony to Congress on US monetary policy, Yellen said financial conditions have become less supportive of economic growth, the slowdown in China could weigh further on the US and the outlook for inflation is falling.
Without stating it specifically, her remarks were seen to suggest the next hike to interest rates may be a long way off.
"Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar," Yellen said.
"These developments, if they persist, could weigh on the outlook for economic activity and the labor market, although declines in longer-term interest rates and oil prices provide some offset."
Closer to home, UK industrial production fell 0.4% year-on-year in December, trailing estimates for a 1% increase. Manufacturing output declined 1.7%, more than the 1.4% fall that was forecast.
"Declining industrial production and manufacturing output, combined with headwinds facing producers from a troubled world economy, point to the growth in the services sector pulling even further ahead over the next few quarters, said Martin Beck, senior economic advisor to the EY ITEM Club. "As a result, a more balanced expansion continues to look like a forlorn hope."
Another report from the Energy Information Administration showed a surprise fall in crude stockpiles in the past week.
US commercial crude inventories fell by 754,000 barrels to a total of 502 million barrels, as refinery runs and exports fell from the previous week. Analysts had expected at 3.6-million-barrel build.
At 1651 GMT Brent crude rose 1.2% to $30.71 per barrel and West Texas Intermediate fell 1.4% to $27.53 per barrel.
On the company front, Hikma Pharmaceuticals plunged as the cash consideration for its takeover of Roxane Laboratories almost halved on the back of significantly lower revenue projections
Housebuilders were on the rise, including Taylor Wimpey, Berkeley Group Holdings and Barratt Developments, after sector peer Bellway reported strong growth in first half housing completions, saying it remains on target to deliver a 10% rise in full year volumes.
Tesco gained after it bought the remaining stake in coffee chain Harris & Hoole it did not already own.
Homewares retailer Dunelm Group rallied after it declared a special dividend payment and reported a solid first half of the year.
ARM Holdings declined despite posting a strong set of full year results and saying it was confident of meeting forecasts for 2016 as demand for its microchip technology continues to grow.
Glencore slumped after Societe Generale downgraded the stock to 'hold' from 'buy'.
Tullow Oil tumbled as the company reported full year revenues had fallen 27% from $2.21bn (£1.52bn) in 2014 to $1.61bn, due to the drop in oil prices.
Greene King climbed as it said record trading on Christmas Day supported growth in sales over the festive period as well as in the 40-week period up to 7 February. |
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| | Market Movers
FTSE 100 (UKX) 5,672.30 0.71%
FTSE 250 (MCX) 15,536.34 1.43%
techMARK (TASX) 2,939.06 0.57%
FTSE 100 - Risers
Worldpay Group (WI) (WPG) 279.10p 5.80%
International Consolidated Airlines Group SA (CDI) (IAG) 507.00p 4.84%
Mondi (MNDI) 1,197.00p 4.72%
Prudential (PRU) 1,175.50p 4.40%
Tesco (TSCO) 181.30p 4.32%
CRH (CRH) 1,709.00p 4.27%
St James's Place (STJ) 842.50p 3.82%
DCC (DCC) 5,015.00p 3.72%
Legal & General Group (LGEN) 209.70p 3.61%
Dixons Carphone (DC.) 437.90p 3.55%
FTSE 100 - Fallers
ARM Holdings (ARM) 900.00p -4.26%
Randgold Resources Ltd. (RRS) 5,700.00p -3.47%
Ashtead Group (AHT) 798.50p -3.21%
Antofagasta (ANTO) 398.40p -3.04%
TUI AG Reg Shs (DI) (TUI) 1,052.00p -2.86%
Fresnillo (FRES) 830.00p -2.70%
Anglo American (AAL) 325.40p -2.52%
Hikma Pharmaceuticals (HIK) 1,945.00p -2.51%
BHP Billiton (BLT) 653.80p -1.85%
BP (BP.) 330.10p -1.30%
FTSE 250 - Risers
Dunelm Group (DNLM) 934.50p 13.27%
Domino's Pizza Group (DOM) 940.50p 9.81%
Sophos Group (SOPH) 190.20p 7.95%
Marshalls (MSLH) 284.90p 7.67%
Ocado Group (OCDO) 250.00p 7.53%
Indivior (INDV) 140.50p 7.42%
Zoopla Property Group (WI) (ZPLA) 213.80p 6.90%
IP Group (IPO) 165.40p 6.57%
Poundland Group (PLND) 157.40p 6.14%
BGEO Group (BGEO) 1,663.00p 5.92%
FTSE 250 - Fallers
Tullow Oil (TLW) 147.70p -8.54%
Nostrum Oil & Gas (NOG) 263.70p -4.14%
Telecom Plus (TEP) 869.00p -3.44%
PayPoint (PAY) 738.50p -3.27%
Ashmore Group (ASHM) 211.30p -3.07%
ICAP (IAP) 404.10p -2.41%
Paddy Power Betfair (PPB) 9,055.00p -2.21%
Aldermore Group (ALD) 178.00p -2.20%
P2P Global Investments C (P2P2) 918.00p -2.18%
Vedanta Resources (VED) 212.90p -2.11% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Deutsche Bank leads bounce in banks European stocks racked up solid gains on Wednesday, with banks surging ahead following heavy losses in the previous session and after the chair of the US Fed told Congressmen that financial conditions in the US had tightened and that weakness in economies overseas, in particular, posed risks to the US.
The benchmark DJ Stoxx Europe 600 index was up 1.97%, Germany's DAX was up by 1.72% and France's CAC 40 by another 1.59%.
Commenting on the speech by the head of the US central bank, Ian Sheperdson, chief economist at Pantheon Macroeconomics, said: "Fed Chair Yellen's Testimony does not close the door to a March rate hike, given that the meeting is still more than a month away, but if the committee loses its nerve in the face of continued market volatility, no-one will be able to say they are surprised. [...]
"The March decision will depend on the labor market data, which in all likelihood will signal the need for higher rates, and a host of market developments and non-labor data, which likely will not. We're sticking to our 55/45 call in favor of a March hike, but it will be close either way."
Banks were the standout gainers following a dismal performance on Tuesday, with the Stoxx 600 index for the sector finishing higher by 4.78%.
Deutsche Bank led the charge, bouncing back by 6.18% - although it surged by nearly 14% at one point in the session - on media reports the lender was considering a bond buyback. Shares in the bank slid on Tuesday despite assurances from its chief that its balance sheet was "rock solid".
Energy markets were also stable, with West Texas Intermediate crude furtures were up by 0.07% at $27.96 a barrel and Brent crude was 2.54% higher to $31.18 a barrel.
It wasn't all good news, however, as investors sifted through a raft of disappointing earnings and the Japanese currency continued to strengthen.
Japan's Nikkei 225 equity benchmark surrendered another 2.31% overnight to 15,713 points while the dollar/yen lost 1.11% to 113.83.
Luxury brand Hermes was on the back foot after reporting a slowdown in 2015 sales growth.
Shares in Moller-Maersk tumbled after the Danish container shipping company said its underlying results for 2016 were likely to be significantly lower.
ARM Holdings, which designs chips for Apple, was also under the cosh after posting a rise in full year pre-tax profit and sales but noted a slowdown in the smartphone market.
Heineken nudged a touch lower after its full-year sales numbers came in just below analysts' expectations, but Carlsberg rallied as its fourth quarter numbers surpassed estimates. |
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| | US Market Report | | US open: Stocks rally as Yellen's remarks suggest delay to rate hike US stocks rallied as Federal Reserve Chair Janet Yellen flagged risks to the economy that could delay another increase in interest rates.
The Dow Jones Industrial Average rose 0.63%, the Nasdaq increased 1.65% and the S&P 500 climbed 1.01% at 1549 GMT.
In prepared remarks for her semiannual testimony to Congress on US monetary policy, Yellen said financial conditions have become less supportive of economic growth, the slowdown in China could weigh further on the US and the outlook for inflation is falling.
Without stating it specifically, her remarks were seen to suggest the next hike to interest rates may be a long way off.
"Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar," Yellen said.
"These developments, if they persist, could weigh on the outlook for economic activity and the labor market, although declines in longer-term interest rates and oil prices provide some offset."
Meanwhile, oil prices gained with West Texas Intermediate crude futures up 1.7% to $28.44 per barrel and Brent crude up 3.4% to $31.39 per barrel at 1551 GMT.
In company news, SolarCity Corp.'s shares plunged after it said late on Tuesday that it will continue to fall short of its installation goals. |
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| | Broker Tips | | Broker tips: Shire, Dunelm, Glencore RBC Capital Markets upgraded Shire to 'outperform' from 'sector perform', keeping the $240 price target ahead of the company's fourth quarter results on Thursday.
RBC said that following the recent pullback, the share price reflects attractive value and future competitive threats in the haemophilia market.
"We have held for some time that Shire is a high quality pharmaceutical/biotech company with a strong management team. Our key concern keeping us on the sidelines was valuation plus, more recently, gaining a deeper understanding of Baxalta's important haemophilia business given the potential for heightened competition over the next several years," the Canadian bank said.
However, it has now reviewed the competitive threat facing the haemophilia portfolio and said the current share price more than accounts for the future competitive environment. RBC said the addition of Baxalta's haematology, immunology and oncology franchises further diversifies Shire's existing offerings. It argued the combined company has a strong, diverse pipeline with over 60 programmes in development - over 50 of these target rare diseases - and management expects over 30 launches from the combined pipeline by 2020.
RBC also highlighted Shire's attractive rare disease portfolio, which contains a number of products with no or limited competition.
Canaccord Genuity has reiterated its 'hold' rating for Dunelm Group after the homewares retailer declared a special dividend and reported a solid first half.
For the 26 weeks to 2 January, the FTSE 250 list company lifted sales 10.3% to £448.1m, with store like-for-like (LFL) sales up 3.4%, though numbers were boosted by an extra six days of winter sale in the recent calendar.
LFL sales growth was driven by a strong performance from curtains and bedding, particularly the new Kids range.
With gross margins improving slightly, profits before tax rose 10.7% to £75.5m, while earnings per share grew 11% to 29.3p.
Cash generation continued to be strong and as well as the interim dividend being increased by 9.1% to 6.0p per share, a special distribution of 31.5p per share was announced, which will cost £64m and be payable to shareholders.
"These results represent another solid set of results from a quality company," Canaccord Genuity said.
The broker said given new chief executive John Browett's track record at Dixons Retail for "driving sales and profit densities and improving customer service, we would expect nothing less from him in pursuing and driving Dunelm's growth for the longer term".
The target was left unchanged at 910p.
Societe Generale downgraded Glencore to 'hold' from 'buy' pointing to finely balanced fundamentals.
It said the mining sector has seen a dramatic rebound recently due to an FX-led bounce-back in commodity prices, with the FTSE all-share mining index erasing the losses from early January.
"Such a performance is all the more remarkable given the pain suffered by the broader market amidst concerns over slowing global growth. At this juncture, we do not see the right combination of fundamentals to sustain the positive momentum in mining names," it said.
It expects Glencore's fourth quarter production results on Thursday to show a significant quarter-on-quarter drop in the copper and zinc units, reflecting the cash preservation measures put in place.
SocGen reckons full year production is likely to come in at the lower end of management guidance for all base metals, with 1,450kt for copper and 1,420kt for zinc.
"The results are unlikely to be share price-moving given the market's current focus on profit margins rather than tonnes mined," the bank said.
It kept its 100p price target on the stock unchanged. | | |
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